ACCC views on Easter petrol prices

Claims that there should be a large increase in retail petrol prices before the Easter weekend due to recent increases in the international prices are premature, to say the least, and not clearly supported by the latest data on international and world oil and petrol prices, Australian Competition and Consumer Commission Chairman, Professor Allan Fels, said today.

"There is a real possibility that the underlying price level will rise by a cent or two in the next week but at this time the data does not support more than that. In other words, if the most recent peak price in a capital city is around, say 90 cents per litre, its next peak could be a cent or two higher.

"The claims that the underlying level of retail prices will rise substantially seems inflated. The international price has declined today by around $US 1 per barrel, and it is not clear that the previous upward trend will continue.

"Recent decisions by OPEC and other oil producing nations have caused the price of oil to increase. The majority of these international price movements appeared to have flowed through to retail prices in metropolitan Australia, and therefore prices are not expected to increase much further than the current recent peak of the price cycle.

Motorists should be wary of claims made by the industry that are often designed to soften them up to price rises.

The current peak prices are:

"It should be noted however, that there are numerous factors that can affect international prices and this makes it difficult, if not impossible, to predict future trends. Based on this there is no certainty that international prices will continue to rise.

"Generally the advice being offered by the NRMA and the Service Station Association that it is best to fill up petrol tanks early in the week before retail prices rise is sound" Professor Fels said. "Our point is that in capital cities there seems no reason for the prices to be in the mid-nineties. Rather it should be below this.

"Prices in capital cities usually move in price cycles. Consumers should be aware of, and take advantage of, these cycles prior to the Easter weekend. As to the oil industry, there would be strong public and government concern if the industry tried to exploit motorists at Easter.

"The ACCC will be closely monitoring retail petrol, diesel and automotive LPG prices over the Easter holiday period. The ACCC has an extensive petrol price monitoring program covering around 4,000 retail petrol stations throughout Australia.

"The ACCC will be closely scrutinising the prices of the three fuels in the five major metropolitan cities in the period leading up to the Easter weekend and will also be monitoring prices in these areas over all four days of the public holiday period. The monitoring will cover non-metropolitan and regional prices in 150 country 'hot spots' in the period leading up to the Easter weekend.

"The ACCC has some concerns about rural prices. They typically lag city prices up and down and the possibility that all international influences have not flowed through to country retail prices cannot be ignored.

"International prices in recent years have been on a roller coaster ride. In August of 2000 the international benchmark for unleaded petrol, Singapore Spot Mogas 95 Unleaded, climbed to a monthly average of $US 38.29 per barrel. Since then prices have been up and down and finally troughed at $US 20.88 per barrel in November 2001.

"However, since mid February 2002 the benchmark has risen significantly peaking at $US 29.70 per barrel on 20 March 2002. The rule of thumb is that a $US 1 movement in the international benchmark will usually equate to a 1 cent per litre movement in retail pump prices".

In contrast retail prices across four major metropolitan cities (Sydney, Melbourne, Adelaide and Perth) averaged at 94.4 cpl for the month of August 2000. By November 2001 retail prices had fallen to an average 79.8 cpl. Brisbane has been excluded from the average as there is a State subsidy of around 9 cpl (including a GST effect) and this biases average prices when compared to other major metropolitan cities.

"The ACCC will continue to compare retail prices with its internal benchmark to ascertain whether companies have increased prices in anticipation of increased demand over the holiday period.

"However, should people have specific evidence regarding anti-competitive behaviour, such as phone calls or meetings where companies have agreed to set prices in the automotive fuel industry, the ACCC urges them to come forward with that information. The ACCC will thoroughly investigate all evidence provided to it. People who believe they have specific evidence should contact the ACCC Infocentre on 1300 302 502".